Bitcoin is an enigma. Most Baby Boomers thought it would be a shooting star, burning brightly initially but fading away quite rapidly. Most Generation Z’s thought it was the best thing since sliced bread, although they don’t really understand that analogy. As things stand today, bitcoin is close to $90 000, up 100% for the year to date. It has gained 33% in the last month alone, owing to the election of Donald Trump, who is pro-crypto. You may not know this, but the government of the United States is one of the largest bitcoin holders with over $20 billion’s worth.
There is a palpable irony here. The biggest risk to bitcoin was government regulation, and the biggest drawcard for bitcoin was decentralization. As things stand today, the grey suits were punched in their sensitive area by the video-gaming rebels. A lot of professional money managers are capitulating and buying bitcoin for their clients due to constant pressure from them. Regulating bitcoin has made it more liquid and accessible with all of the largest fund managers offering ETF’s for retail investors. In most cases, early buyers of bitcoin stumbled into the investment by accident. Somebody told them about this “new currency” and they thought it sounded cool so they bought one. As it happened, the tail started wagging the dog and soon their bitcoin investment was worth more than all of their other worldly possessions.
We have to accept that sometimes something that makes no sense; has no fundamental value in the traditional sense; and can cause some serious harm due to its volatile nature; has become mainstream. Perhaps bitcoin can be regarded as the cult of the financial instrument universe.
